India central bank, the Reserve Bank of India (RBI) has asked the promoters of Kotak Mahindra Bank, Uday Kotak to reduce their stake in the bank to 20 percent by March, 2018 from the present 45.21 percent.

“The RBI has advised the bank that the promoters’ shareholding, now at 45.21 percent, be brought down to 20 percent by March 31, 2018,” Kotak Mahindra Bank said in a press statement. The bank also said that it might be directed to reduce the promoter’s stake to 10 per cent in the bank.

The selling of stake would ensure that the bank complies with the new extant banking license regulations. The new regulations state that the promoters cannot hold more than 15 per cent stake in a bank. They rules also say that the promoters can hold upto 40 per cent stake in the first five years but will have to reduce it gradually to 15 per cent until the 12th year.

The promoters have asked the RBI to extend the timeline for dilution of the stake till 2025. However, the central bank has not accepted the request for more time for reducing the stake. The promoters pointed out that they have been able to reduce their stake in the bank from 63 per cent to 45 per cent within five years after receiving their banking licence in 2003. RBI had asked the promoters to bring down their stake below 50% within five years under the agreement with the promotrs at the time of granting the license.

The shares of Kotak Bank fell 1.26 per cent to close at Rs 572.40 on the Bombay Stock Exchange (BSE).